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PACE v. Regional Transportation Authority

July 17, 2003


Appeal from the Circuit Court of McHenry County. No. 02-MR-8 Honorable Maureen P. McIntyre, Judge, Presiding.

The opinion of the court was delivered by: Justice Callum



Plaintiff, Pace, the suburban bus division of the Regional Transportation Authority (Pace), sought a declaration that defendant, the Regional Transportation Authority (RTA), violated section 4.11 of the Regional Transportation Authority Act (Act) (70 ILCS 3615/4.11 (West 2000)) when it decreased Pace's operating subsidy and rejected its budget for 2002. Also, Pace sought "damages" in the form of subsidies that the RTA allegedly wrongfully denied it. The trial court granted the RTA's motion to dismiss. The court found that the decisions Pace challenges were discretionary acts not subject to judicial review. Also, the court found that Pace was a division of the RTA and therefore could not sue the RTA. We reverse and remand.


Before setting forth the background of the dispute in this cause, we provide an overview of the relationship between the RTA and Pace. The legislature passed the Act in 1974. The Act created the RTA, which voters in Cook, Du Page, Kane, Lake, McHenry, and Will Counties approved by referendum. See Stroger v. Regional Transportation Authority, 201 Ill. 2d 508, 512 (2002). The purpose of the RTA is to oversee public transportation in the six-county region. 70 ILCS 3615/1.02(a)(v) (West 2000). The RTA is a "unit of local government, body politic, political subdivision and municipal corporation." 70 ILCS 3615/1.04 (West 2000).

In 1983, the legislature amended the Act to create the commuter rail division (Metra) (70 ILCS 3615/3B.01 (West 2000)) and Pace (70 ILCS 3615/3A.01 (West 2000)). The 1983 amendments designated as "service boards" the governing boards of Metra and Pace. See 70 ILCS 3615/1.03 (West 2000). The Act also designated as a service board the governing board of the Chicago Transit Authority (CTA), which has existed since 1945 (see 70 ILCS 3605/1 et seq. (West 2000)). The Act delegated to the three service boards the responsibility for providing and operating their respective transportation systems. 70 ILCS 3615/2.01(a) (West 2000). The RTA retained responsibility for the financial oversight of the system and for facilitating the service boards' efforts to deliver public transportation in the region. 70 ILCS 3615/1.02(c) (West 2000).

The RTA board is comprised of 13 directors, and the regions of the six-county area are represented as follows: four directors must reside in Chicago; four directors must reside in suburban Cook County; two directors must reside either in Kane, Lake, McHenry, or Will County; and one director must reside in Du Page County. 70 ILCS 3615/3.01(a) through (d) (West 2000). The chairperson may reside anywhere in the six-county area (70 ILCS 3615/3.01(e) (West 2000)), and one director, who also is the chairperson of the CTA, must reside in the "Metropolitan area of Cook County" (70 ILCS 3605/2, 19; 3615/3.01(a) (West 2000)). The RTA board reviews and decides whether to approve the service boards' budgets. Nine directors must vote to approve a service board's budget. 70 ILCS 3615/4.11(b)(4) (West 2000). Pace has a governing board consisting of 11 directors, who must be chief executive officers of municipalities within Pace's territory, and a chairperson. 70 ILCS 3615/3A.02 (West 2000).

The RTA and the service boards are financed by a combination of fare box revenue, sales tax proceeds, and state and federal grant funds. The Act mandates that the service boards' aggregate operating revenue equal at least 50% of their aggregate cost of providing public transportation each fiscal year. 70 ILCS 3615/4.01(b) (West 2000). If the 50% ratio is not met, the RTA does not receive its annual subsidy from the state and must reduce the service boards' funding accordingly. 70 ILCS 3615/4.09(g), (h) (West 2000). To accomplish the mandate, the RTA sets for each service board a recovery ratio, which represents the percentage of the service board's operating costs that must be recovered by that service board's "system generated revenues." 70 ILCS 3615/4.11(a) (West 2000).

In count I of its complaint, dated January 11, 2002, Pace alleged that, in violation of section 4.11(a) of the Act, the RTA "disproportionately and prejudicially" increased Pace's recovery ratio. From 1985 to 2002, the RTA increased the recovery ratios for the CTA, Metra, and Pace by 2.8%, 6.14%, and 41.7%, respectively. From 1996 to 2002, the CTA's assigned recovery ratio decreased from 52.4% to 52%, Metra's recovery ratio increased from 55% to 55.3%, and Pace's recovery ratio increased from 36% to 40%.

Pace alleged further that the ratios were disproportionate when one considered the service boards' actual performance. For example, the CTA's budgeted recovery ratio for 2000 was 0.8% less than what the CTA actually recovered in 1999 and only 0.2% higher than the 1999 budgeted ratio; Metra's 2000 assigned ratio was 3.8% less than what Metra recovered in 1999 and the same as the 1999 budgeted ratio; and Pace's 2000 budgeted ratio was 7.8% more than what Pace actually recovered in 1999 and 9% more than the 1999 budgeted ratio.

In 2000, Pace did not achieve its 40% ratio. Nevertheless, the RTA again set Pace's 2001 ratio at 40%. To meet the budgeted ratio, Pace raised fares and reduced its staff, marketing expenditures, and services. As a result, Pace's ridership declined by 1,468,326 passenger trips in 2000 and another 1,652,036 passenger trips in 2001.

Pace alleged that, as a result of the RTA's violations of the Act, since 1996, Pace "has been damaged and injured in its corporate capacity through loss of funding in the amount of $99,755,000." Pace asked the court to (1) declare that, for the years 1996 through 2002, the RTA set recovery ratios for Pace that were disproportionate to the ratios set for the other service boards and prejudicial to Pace; (2) order the RTA to set Pace's 2002 recovery ratio at a level that is proportionate to the other service boards' ratios and not prejudicial to Pace; and (3) award Pace $99,755,000 in "damages."

In count II, Pace alleged that, to meet its recovery ratio without cutting services or raising fares further, it sought other funding sources, including federal grants. Each year, the RTA advises the service boards of the amount of federal funding available to them. Since 1985, the RTA consistently allocated 58% of the available funds to the CTA, 34% to Metra, and 8% to Pace. In September 2001, the RTA allocated $25.9 million in federal funds to Pace. Of this amount, $7.6 million was designated for the "capital cost of contracting." This figure represented 8% of all of the federal funds allocated to the service boards.

Pace's 2002 budget allocated $7.8 million of the federal funds to the "capital cost of contracting," which, according to Pace, was the expense of purchasing services from private carriers. Pace alleged that federal regulations allowed it to use the federal funds for this purpose. The Pace board approved the budget and forwarded it to the RTA. Pace alleged that its budget complied with the Act and, therefore, that, under section 4.11(b)(2) of the Act, the RTA was required to approve the budget.

In ordinance No. 2001--83, dated December 28, 2001, the RTA rejected Pace's 2002 budget because it used "federal capital funds" to cover operating expenses. The RTA concluded that, by doing so, the budget relied on unreasonable and imprudent assumptions and did not comply with sound financial practices. The RTA approved an amended budget which removed the grant funds line item and compensated for the removal of those funds by reducing various expenses.

Pace alleged that the RTA violated section 4.11(b)(2) by rejecting Pace's 2002 budget and arbitrarily and capriciously approving an amended budget. Pace asked the court to declare that the RTA's rejection of Pace's 2002 budget was invalid.

The RTA moved to dismiss pursuant to sections 2--615 and 2--619 of the Code of Civil Procedure (Code) (735 ILCS 5/2--615, 2--619 (West 2000)). See 735 ILCS 5/2--619.1 (West 2000). It argued that (1) separation of powers principles precluded the court from reviewing the RTA's discretionary budget decisions; (2) as an operating division of the RTA, Pace lacked the capacity to sue the RTA; (3) the RTA was entitled to protection under the Local Governmental and Governmental Employees Tort Immunity Act (Tort Immunity Act) (745 ILCS 10/1--101 et seq. (West 2000)); (4) the Act does not provide a private right of action to parties aggrieved by violations of the Act; and (5) Pace's claims were time barred, both under the statute of limitations contained in the Tort Immunity Act (745 ILCS 10/8--101 (West 2000)) and the laches doctrine.

The trial court found that, as a division of the RTA, Pace did not have the capacity to sue the RTA. Also, the trial court found that setting recovery ratios and approving or rejecting budgets were discretionary acts not subject to judicial review. Accordingly, the court granted the motion to dismiss. Pace timely appealed.


A. Mootness

Before we address the merits of this appeal, we must decide whether we should dismiss the appeal as moot. Pace complains about decisions the RTA made for the 2002 budget year, which has passed. See 70 ILCS 3615/4.01(a) (West 2000) (RTA's fiscal year runs from January 1 to December 31).

Before the oral argument took place, we raised the mootness issue sua sponte. In response, each party has moved to submit supplemental materials. The RTA seeks to submit recent ordinances it has adopted. On December 13, 2002, the RTA adopted ordinance No. 2002--83, which approved the service boards' 2003 budgets. Again, because Pace proposed using capital grants to fund operating costs, the RTA found that Pace's budget did not employ reasonable and prudent projections and was not financially sound. The RTA approved Pace's budget with the caveat that, to the extent Pace's budget and the ordinance conflicted, the ordinance prevailed. On May 1, 2003, the RTA adopted ordinance No. 2003--23, which approved Pace's use of some of the disputed grant funds. Pace seeks to submit a consultant's report on the uses and benefits of the grant funds.

These materials concern events that occurred after the trial court's ruling. We may take judicial notice of the RTA's ordinances, however. 735 ILCS 5/8--1001, 8--1002 (West 2002); Chicago Limousine Service, Inc. v. City of Chicago, 335 Ill. App. 3d 489, 492 (2002). Likewise, the consulting report is a public document, and we may take judicial notice of it. Maldonado v. Creative Woodworking Concepts, Inc., 296 Ill. App. 3d 935, 938 (1998). The RTA has not objected to Pace's motion, and, in deciding whether a claim is moot, we may consider matters dehors the record. Oak Grove Jubilee Center, Inc. v. City of Genoa, No. 2--01--0938, slip op. at 4 (May 5, 2003). Accordingly, we allow both motions. We note, however, that we consider these materials only in connection with the mootness issue.

Courts of review generally will not consider moot or abstract questions or render advisory opinions. In re Mary Ann P., 202 Ill. 2d 393, 401 (2002). A case is moot when the resolution of a question of law cannot affect the result of the case or when events have occurred that make it impossible for the reviewing court to render effectual relief. Marion Hospital Corp. v. Illinois Health Facilities Planning Board, 201 Ill. 2d 465, 471 (2002). A case on appeal is rendered moot where the issues that were presented in the trial court do not exist any longer because intervening events have rendered it impossible for the reviewing court to grant the complaining party relief. In re India B., 202 Ill. 2d 522, 542 (2002).

Courts have declined to address budgetary issues where the budget year in question had already passed. People ex rel. Sklodowski v. State, 162 Ill. 2d 117, 133-34 (1994) (whether transfer of monies from state pension fund to general revenue fund during the 1992 fiscal year should have been temporarily enjoined was rendered moot by actual transfer of funds); West Side Organization Health Services Corp. v. Thompson, 79 Ill. 2d 503, 506-08 (1980) (mandamus action to compel governor and other state officials to expend unused portion of appropriation was moot where funds were no longer available because appropriation had lapsed pursuant to statute); Illinois News Broadcasters Ass'n v. City of Springfield, 22 Ill. App. 3d 226, 228 (1974) (whether city's human rights commission properly held closed meeting was moot where meeting addressed dismissal of executive director, who had long since been discharged, and salary changes for previous fiscal year); Hill v. Murphy, 14 Ill. App. 3d 668, 671 (1973) (whether police board's budget meeting for 1972 fiscal year was required to be open to public was moot where budget had been approved and mostly spent).

There are two well-recognized exceptions to the mootness doctrine. These exceptions must be construed narrowly and require a clear showing of each criterion necessary to bring the case within their terms. In re India B., 202 Ill. 2d at 543. One provides that a reviewing court has the power to decide technically moot issues if they are capable of repetition yet evade review. Mount Carmel High School v. Illinois High School Ass'n, 279 Ill. App. 3d 122, 125 (1996). For this exception to apply, there must be a reasonable expectation that the same complaining party would be subject to the same action again, and the duration of the challenged action must be too short to be fully litigated before its cessation. In re India B., 202 Ill. 2d at 543. Both elements of this exception are present here. First, there is a reasonable probability that Pace will again be subject to similar adverse budget decisions. In its complaint, Pace alleges that the adverse treatment has continued over several years. The supplemental materials that the RTA submitted show that Pace's recovery ratio continues to be 40% and that the parties still dispute how Pace may use the federal grant funds. Second, the apparently continuing controversy here will always be limited to a single budget year, and there is little question that these potentially complicated financial issues cannot be fully litigated before at least the bulk of the budget year has passed.

The second exception, the public interest exception, also applies here. When deciding whether to apply this exception, a court considers (1) the public nature of the question, (2) the desirability of an authoritative determination for the purpose of guiding public officers, and (3) the likelihood that the question will recur. In re Mary Ann P., 202 Ill. 2d at 402. Whether a service board may seek judicial review of the RTA's budget decisions is a matter of substantial public concern affecting public transportation in the region. Moreover, because future budget disputes are likely, a decision on the issue will be beneficial to guide the RTA board and the service boards. This is one of the "rare" cases that should be reviewed because of the magnitude of the interests involved ...

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